Federal Council adopts dispatch on reform of withholding tax
The Federal Council wants to strengthen Switzerland as a location for the debt capital market and for group financing activities in all sectors.
To this end, it adopted the dispatch on the Federal Withholding Tax Act (strengthening the debt capital market) at its meeting on 14 April 2021. At the same time, it opened the consultation on the extension of the reporting procedure in the group for withholding tax.
The reform provides for the abolition of withholding tax on domestic interest without replacement. This does not apply to interest on customer deposits with domestic natural persons. With the reform, it can be assumed that the issuance of bonds, which has so far been carried out abroad, will in future increasingly take place out of Switzerland. This can strengthen the Swiss debt capital market. The abolition of withholding tax on interest will also create an incentive to carry out more intra-group financing activities in Switzerland. Overall, the reform strengthens the debt capital market and will trigger value creation and employment impulses in Switzerland in the medium and long term. In addition, the Federal Council is abolishing the turnover tax on domestic bonds. This will make it more attractive to acquire domestic bonds via a domestic securities dealer.
The notification procedure within the group for withholding tax is to be extended. It can now be used for shareholdings of 10 per cent or more. The authorisation procedure will also be simplified administratively. This has almost no financial impact and no significant effect on tax security. The companies receive a liquidity advantage at the expense of a liquidity disadvantage at the federal level. However, this is negligible in today's interest rate environment.
The media release as well as all documents and further information are available here.